As Beijing continues to crack down on China’s internet company, tech buying opportunities could arise, according to HSBC Global Asset Management’s Alexander Davey.
Investors need to “see through” the current procedure and “get back to the fundamentals of the company,” Davey, global capability head for active & quantitative equity at CNBC, told Street Signs Asia on Wednesday.
Regulatory fears about China’s tech company have resurfaced in recent days after local authorities announced late Friday that ride-hailing giant Didi Chuxing is being investigated for allegedly illegally collecting personal information from users. As a result, the app has been removed from China’s app stores and will not be available for new downloads during the company’s review.
The announcement came just a few days after Didi went public in the United States. Didi’s shares plunged more than 19% on Tuesday as US markets returned to trading after a long weekend holiday.
While there are clear concerns in the short term with increased regulatory scrutiny, companies with strong fundamentals could see buying opportunities if their stocks fall on investor fears.
“The main problem we would look at is … the assessment,” he said. “Where do we see a fair rating for this? Where do we see a point at which this rating is clearly … oversold and the confidence to be able to keep it to some extent through the noise?”
Alibaba’s co-founder Jack Ma (R) looks at Tencent Holdings’ CEO Pony Ma during a ceremony marking the 40th anniversary of China’s “reform and opening up” policy in the Great Hall of the People in Beijing on December 18, 2018.
WANG ZHAO | AFP via Getty Images
China’s tech giants’ stocks have been volatile so far this year.
The Hang Seng Tech Index, which tracks the largest Hong Kong-listed tech stocks – including Alibaba, Meituan and Tencent – is currently more than 9% lower this year after rising earlier in February.
By comparison, the tech-heavy Nasdaq Composite continues to test new highs on Wall Street and is up nearly 14% this year.